How much house can you actually afford?
Use the 28/36 rule with your real income, debts, and down payment to find a home price range that won’t stretch your budget — based on math, not what the bank approves.
Your Numbers
The 28/36 rule — and why it actually matters.
“How much house can I afford?” is the most expensive question most people ever ask — and most people get the wrong answer. Lenders will pre-qualify you for far more than you should actually borrow. Real estate agents will steer you toward the top of that range. Both are paid more when you spend more.
The honest answer comes from a 50-year-old guideline called the 28/36 rule:
- 28% — Your monthly housing costs (PITI: principal, interest, taxes, insurance) shouldn’t exceed 28% of your gross monthly income.
- 36% — Your total monthly debt payments (housing + car + student loans + credit cards + everything else) shouldn’t exceed 36% of your gross monthly income.
This calculator works backwards from those two numbers. It finds the highest home price where both rules still hold, given your income, your debts, your down payment, and current interest rates.
Why the bank’s number is wrong
Lenders today often approve borrowers with back-end DTIs as high as 43% to 50%. Why? Because they make money on the loan, not on whether you can comfortably afford it. A 50% DTI means half your gross income goes to debt — leaving very little for groceries, savings, retirement, emergencies, or the $400 surprise repair bill.
Pre-approval letters tell you the maximum the bank is willing to risk. They don’t tell you what’s wise.
On a $90,000 income with $450 in monthly debts and $50,000 down, the bank might approve you for a $475,000 home. The 28/36 rule says $330,000–$350,000 is your real comfort range. The difference is $125,000 of “approval” you should probably leave on the table — unless you want every dollar going to the house.
How the math works
Front-end DTI (the 28%)
Your gross monthly income × 28% = your max monthly housing cost. Working backwards from that monthly number, accounting for property tax and insurance, gives the maximum loan you can support. Add your down payment to get the home price.
Back-end DTI (the 36%)
Same logic, but it includes all debts. Take 36% of your gross monthly income, subtract your existing monthly debt payments, and what’s left is your max housing budget. Sometimes this is a smaller number than the front-end limit — which means existing debts are capping how much house you can afford. Pay down debt before buying and your budget grows.
The lower of the two wins
Affordability is whichever rule produces the smaller number. If you have no debts, the 28% rule typically applies. If you have car payments and student loans, the 36% rule often becomes the binding constraint.
Beyond the formulas
The 28/36 rule is a starting point, not a guarantee of comfort. Other things to factor in:
- Location costs — high property tax states (NJ, IL, NY) push your PITI up significantly even at the same loan amount
- Lifestyle — if you have kids, eat out, travel, or plan to start a family, you need more cushion below 28%
- Job stability — variable income or single-earner households should aim lower (22–25% front-end)
- Other goals — retirement contributions, college savings, and emergency funds all need room in your budget
Many financial advisors suggest aiming for 25% or lower on the front end if you want real flexibility. The 28% number is the ceiling, not the goal.
Frequently asked questions
Why is the bank’s pre-approval so much higher?
Banks calculate maximum approval based on what you can technically pay without defaulting — not what’s comfortable. They typically allow up to 43–50% back-end DTI, which leaves very little budget for anything else. Their incentive is to lend more, not to keep you out of house-poor stress.
Should I use gross or net income?
Gross income — that’s what lenders use, and what the 28/36 rule is based on. If your tax burden is unusually high (high state tax, no deductions), you may want to be more conservative and use 25% as your front-end target instead of 28%.
What counts as monthly debt?
Recurring monthly obligations that show up on your credit report: car loans/leases, student loans (even if in deferment, lenders count them), credit card minimum payments, personal loans, alimony, child support, other mortgages. Not included: groceries, utilities, gas, insurance, phone, subscriptions.
Does the down payment % affect affordability?
Yes. Larger down payments lower your loan amount, which lowers your monthly payment, which means you can afford a higher total home price. They also eliminate PMI at 20%+, which adds another $100–$300/month of buying power.
What if I want to be more conservative?
Many financial planners recommend keeping housing at 25% or even 20% of gross income, especially if you have kids, want to retire early, run a business, or have variable income. The 28/36 numbers are the maximum responsible range — your personal comfort zone may be lower.
This calculator uses the 28/36 rule as a guideline for affordable housing costs. Results are estimates based on the inputs you provide and do not constitute a loan offer or financial advice. Actual loan approval depends on credit history, employment, debt-to-income ratio, down payment, and lender-specific criteria. Property tax averages cited as of April 2026; consult a qualified mortgage lender for accurate pre-approval.